This is what you’ve always wanted. You’re a CEO pioneering a startup with real employees, revenue, and clients. All you want to do is push the boat along and drive your company towards immeasurable success. At some point, you start encountering problems. It’s not smooth sailing any longer, it’s become about braving the storm. Everyone told you to be wary, “most startups fail.” Now you understand why.
If you’re dealing with problems that are sinking your startup—like hidden costs and employee burnout—then know you’re in a position countless other business owners have been in. The difference? You’re going to succeed.
Be Wary of Premature Scaling
Scaling prematurely is one of the main reasons startups fail. They say that no business is ever ready for their first scale, that infrastructure is created on the way. What you need to be wary of is not delivering on your promise. If you sign a new client that doubles your revenue and gives you a stern deadline yet you’re already struggling to fulfill your retainers, there’s no shame in allowing an opportunity to pass that may very well sink your ship.
The key is knowing when it’s time to scale and when one would destroy your company.
Bigger Team, Bigger Problems
Understand that as you grow, new obstacles are going to arise. If you hit 50 employees, be aware of the below:
- Health and benefits – The Affordable Care Act demand you offer a health insurance package.
- Parental Leave – The Family Medical Leave Act requires a paid 12-week maternity leave.
- ACA Reporting – ACA reporting to the IRA means new tax implications on the company at large.
If you’re struggling to stay afloat and you’re nearing that 50 marks, these are definitely things to consider.
Bring on a Bookkeeper
It’s not uncommon for a CEO to want to do everything on their own. In fact, part of that control is why many startups succeed in the first place. One of the hardest things to do as the leader of a startup is to find someone you trust to handle your responsibilities. At times, it never happens.
However, if you’re struggling financially, now is the time to ask for help. Maybe you just need to do a one-off bookkeeping clean up, or perhaps this one-off project becomes a service you integrate into your company. Whatever the case, in times of chaos a bookkeeper can be an absolute godsend. Don’t write it off.
Location, Location, Location
How much do you pay for rent? Are you trying to make a statement by keeping the shop in the heart of Silicon Valley? Or by the beach in downtown Santa Monica? When your startup is having a difficult time staying afloat, it’s important to reevaluate your financial decisions. Was it face value that drew you to your location? Do you need to be there?
If you can move your office to a cheaper, more affordable location, then do so. Plenty of startups go under because they receive a massive round of funding only to drive up their overhead without being frugal. Truth be told, it’s hard to say no to the beachside office when there are 10 million dollars in the bank account and a team that hasn’t hit double digits yet.
Think about turning to a communal workplace, having your employees work remotely, or finding a cheaper office. This could free up capital you need to survive.
Find an Investor
There’s a reason why startups often raise multiple rounds of funding. Sometimes, it’s not about surviving, it’s about the extra push needed to move past an obstacle. If your PnL (profit and loss) is sound, you’ve proved your product, and the reason you can’t stay afloat is simply a matter of capital, look to investors for help. Of course, this will mean giving up more of your company but if it’s the difference between failure and success, most would argue that it’s worth it.
You’ve Got This
We’ll leave you with this. You’re familiar with FedEx, right? How about Airbnb? And lastly, KFC? Each of these companies was a thread away from failure. In fact, the fate of FedEx relied solely upon a game of poker, where the founder gambled his last $5000 to make $32,000, which allowed FedEx to operate one more weekend.
The point: no matter how dire the situation, this is going to be a great part of your success story.